Licence To Occupy Solicitors
Need a place to do business and have no time to waste? Perhaps you have orders to fill or lenders and investors breathing down your neck? Or you simply need a location to set up a shopfront.
A licence to occupy could be the solution you’ve been searching for that’ll allow you to start doing business and getting orders and sales through the door.
Our network of solicitors is ready to assist you with license to occupy agreements when your business is looking for a short-term property solution as a stopgap while you look to secure longer-term property accommodation.
Get in touch with our Legal Assessment Team for a free case evaluation and quote today.
What is a licence to occupy?
A licence to occupy is a legal agreement between a property owner (licensor) and an occupier (licensee) that gives the occupier the right to occupy a building for a specified purpose, but not exclusive possession or interest in the land.
The agreements are personal to the parties and the owner of the building can revoke the licence if they choose.
There are two types of licence to occupy, a bare licence and a contractual licence.
What is a bare licence?
Under a bare licence, the licensee is allowed to use the licensor’s property via a verbal agreement. It’s the simplest form of licence granted by a landowner to an individual to access and use their land.
It does not grant the licensee any interest in the land or change the ownership in any way.
A bare licence does not require the licensee to remunerate the landowner.
By granting a bare licence the landowner protects the person using the land from being accused of trespass. As long as the licensee follows the terms of the bare licence they are legally protected from trespass charges.
A bare licence may also be implied when a landowner is aware of trespass on their land but does nothing about it.
What is a contractual licence to occupy?
A contractual licence to occupy differs from a bare licence in that it is operated as a contractual agreement. Additionally, unlike a bare licence, the occupier of a licence to occupy pays for the privilege.
Similar to a bare licence, but unlike a tenancy, this form of licence does not grant the occupier exclusive possession rights.
In a nutshell, a contractual licence to occupy is a short-term contract where the occupier pays rent, but does not have the same rights and protection as a tenant.
What is the difference between a licence to occupy and a tenancy agreement?
A tenancy agreement unlike a licence to occupy gives the occupier, or tenant in this case, exclusive possession of a property. Under a licence to occupy the landowner has the right to use the land and property at the same time as the occupier if they choose.
Typically, tenants have exclusive possession of a property unless they have a live-in landlord. When a tenant lives with a resident landlord this must be at the landlord’s permanent residence.
Tenants have more responsibilities and are also granted greater rights than occupiers under a licence to occupy.
Their responsibilities include paying rent in full and on time. Whereas only those under a contractual licence out of the wider spectrum of licences to occupy are bound by this.
Tenants’ rights include the right to quiet enjoyment, privacy and well-maintained property. Tenants can be evicted when they don’t follow the terms of their lease, however, they have protection from unfair eviction.
Protection from eviction means most tenants need a court order to be protected, this is not the case for many under a licence to occupy.
How long can a licence to occupy last?
Licences to occupy are intended to be short-term arrangements. In practice, they commonly last for 6 or 12 months.
They are typically used as a stopgap for a business that needs a base of operation while they are looking for the ideal premises, or in negotiation for a lease.
A licence can be as long as each party agrees to. However, when businesses need somewhere to base themselves for a longer period, they should consider taking out a lease on the temporary property they’re occupying if it is suitable for their needs.
Occupying a property under the limited rights of a licence to occupy can end up causing problems over the long term.
What are the benefits of a licence to occupy?
There are various benefits to a licence to occupy which result from the majority of these arrangements not being formal contracts:
They’re quicker to arrange than leases.
They offer more flexibility on end dates than leases.
The landowner can occupy the property alongside the occupier.
The landowner can offer licences to multiple individuals or businesses.
A licence to occupy can cover the period between a lease being found and signed off.
A licence to occupy sets out the exact circumstances it can be terminated, whereas a landlord can terminate a lease whenever they want.
Licensees don’t have to pay SDLT or LTT.
What are the disadvantages of using a licence to occupy?
On the other hand, there are drawbacks to these arrangements:
They don’t grant security of tenure to an occupier unless exclusive possession is expressly granted in the agreement.
When the licensor disposes of their interest in the property the licence will cease to exist as it’s a personal agreement between the two parties.
There are limited controls over rent unlike leases which are protected under rent control regulations, this means licensees could be charged above market rate or face increases out of the blue.
The short-term nature of a licence to occupy may not be suitable for businesses looking for long-term accommodation.